Making a Sound Investment Decision Reading Answers

Jan 20, 2023

Making a Sound Investment Decision Reading Answers is an IELTS Academic reading topic that requires candidates to solve a given set of questions within 20 minutes. Making a Sound Investment Decision Reading Answers has been referenced from the IELTS Book 2019 IELTS Reading Actual Test 13 and contains a total of 14 questions.. The question types in this IELTS reading topic; Making a Sound Investment Decision Reading Answers, that candidates are required to solve are; choose the correct letter, yes/no/not given and no more than three words. To practice more such reading passage candidates can refer to the IELTS reading practice papers.

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Section 1

Read the Passage to Answer the Following Questions

Making a Sound Investment Decision Reading Answers

As investors tire of stock market instability, the idea of owning a piece of real estate is gaining in popularity. Now, not everyone has what it takes to become a landlord, but if you can make a go of it, it certainly has the potential to become a good money-earner. Here are some tips from successful real estate mogul, Janet Anderson, on how to start building up your property portfolio.
According to Janet, one of the best ways to identify a bargain is to hunt for foreclosures. Foreclosures are properties banks have repossessed because their owners were unable to meet the mortgage repayments. Banks want a quick sell on these places, Janet says. They want to cut their losses and get their money back as quickly as possible. Developing a network - making connections with city clerks and bank employees who know which properties are about to be sold - can be an excellent way to identify such bargains. And bargains they certainly can prove to be; in a recent firesale auction ('firesale auction' is the phrase that has been coined to describe auction-room events dedicated entirely to the disposal of repossessed assets) a house with a market value nearing $1,000,000, but with a low reserve price designed to encourage bidders and secure a quick sale, went for $450,000; that's a whopping 55% discount.
It's also important to be realistic though and not stretch yourself too far financially. Janet says the biggest mistake you can make is to borrow too much or over-borrow. For first-time investors, lenders usually demand bigger down payments because you haven't got a proven track record. That's more of your money on the table and, therefore, should anything go wrong, you're in for a big financial hit.
Her business partner, James Nylles, is in complete agreement on this point. He also highlights the fact that the mortgage payments and deposits are only part of the long-term cost of buying a rental property. There is also the cost of repairs, administration and maintenance, rental manager's fees, insurance and so on, all of which require you to hold a significant amount of money in reserve. Failure to factor this in when calculating how much you can afford to part with in mortgage repayments can lead to disaster.
One of the biggest traps for first-time investors, according to Nylles, is the temptation to pay over the odds to get the property you desire. Buyers often get carried away, especially in the auction-room setting, which can get quite competitive and even descend into a racket of one-upmanship. They end up paying top-dollar and landing themselves in a financial situation they can ill afford to be in. Remember, you are in the property game to make money, so the more money you have to pay upfront for a property, the less likely you are to recoup your investment in the long run. The good news, however, is that the housing market is not very hot at the moment, which means the danger of overpaying is not so great. Always set emotions to one side and think from a purely business perspective. The question of your liking or disliking the property is irrelevant. As Nylles points out: "you will not be living there." Business decisions are made in the cold hard light of day; your objective is to minimise your outlay and maximise your return. Whether you secure a huge home in pristine condition or a tiny flat with barely room to stretch in is irrelevant - if the tiny flat gets you a better return on your investment then the choice is a no-brainer.
And last of all, do your homework. You've got to get to know the location in which you are going to invest. Look out for areas which are earmarked for government investment. Urban renewal areas are often very attractive since house and rental prices in such places are low right now but can be expected to rise in the not too distant future. The range of local amenities, safety and the state of the local economy are all important factors to consider, too. As the old saying goes, 'location, location, location'. Invest in a good location and you will maximise your rental income.

Section 2

Solution and Explanation
Read the Passage to Answer the Following Questions

Questions 27-33:
Answer the questions below using NO MORE THAN THREE WORDS for each answer.

What are investors getting fed up with?

Answer: stock market instability
Supporting Sentence: As investors tire of stock market instability, the idea of owning a piece of real estate is gaining in popularity.
Keywords: investors, stock market, instability,
Keyword Location: Paragraph 1, lines 1-2
Explanation: The answer to this question is evident from the first line of the first paragraph. It quotes that investors are tired of the instability that is currently going on in the stock market.

Janet Anderson is involved in the sale of property. What is another phrase used in paragraph 1 to describe this type of business?

Answer: real estate
Supporting Sentence: Here are some tips from successful real estate mogul, Janet Anderson, on how to start building up your property portfolio.
Keywords: Paragraph 1, lines 3-5
Keyword Location: successful, real estate mogul, Janet Anderson
Explanation: As explained in the reading passage, Janet Anderson is renowned for sales of property. Another term used for the same is rela estate. Thus, the answer to this question is real estate.

What is one of the best ways to identify a bargain in the property market?

Answer: hunt for foreclosures
Supporting Sentence: According to Janet, one of the best ways to identify a bargain is to hunt for foreclosures
Keywords: Janet, bargain, hunt for foreclosures
Keyword Location: paragraph 2, line 1
Explanation: In the second paragraph, the term hunt for foreclosures have appeared. It has been stated that the best way to bargain when in a real estate transaction is to hunt for foreclosures. Thus, the answer is hunt for foreclosures.

Failure to meet your what, can cause your home to be repossessed?

Answer: mortgage repayment
Supporting Sentence: Foreclosures are properties banks have repossessed because their owners were unable to meet the mortgage repayments.
Keywords: Foreclosures, repossessed, mortgage repayments
Keyword Location: Paragraph 2, lines 2-3
Explanation: Properties that have been repossessed by banks due to the inability of their owners to make mortgage payments are known as foreclosures.

What do banks want to get back quickly on foreclosed properties?

Answer: their money
Supporting Sentence: They want to cut their losses and get their money back as quickly as possible.
Keywords: losses, their money
Keyword Location: Paragraph 2, lines 3-4
Explanation: As stated in the reading passage; they aim to minimize their losses and recoup their funds swiftly.

Developing networks is an excellent way to find what?

Answer: bargain(s) properties
Supporting Sentence: Developing a network - making connections with city clerks and bank employees who know which properties are about to be sold - can be an excellent way to identify such bargains.
Keywords: city clerks, bargains
Keyword Location: paragraph 2, lines 4-6
Explanation: Creating connections with city clerks and bank employees is an effective approach. They are aware that properties that are soon to be sold can be a beneficial strategy for identifying potential deals.

What is the biggest error of judgement first-time investors can make, according to Anderson?

Answer: borrow too much/over-borrow
Supporting Sentence: It's also important to be realistic though and not stretch yourself too far financially. Janet says the biggest mistake you can make is to borrow too much or over-borrow.
Keywords: realistic, stretch, borrow, too much, over-borrow
Keyword Location: paragraph 3, lines 1-2
Explanation: Being realistic is crucial and it's important not to overextend yourself financially. Janet emphasizes that the most significant error one can make is taking on too much debt or borrowing excessively.

Questions 34-40:
Do the following statements agree with the information given in Reading Passage 3?
In spaces 34- 40 below, write

YES - if the statement agrees with the writer's views
NO - if the statement doesn't agree with the writer's views
NOT GIVEN - if it is impossible to say what the writer thinks about this

Banks demand larger deposits from first-time property investors.

Answer: Yes
Supporting Sentence: For first-time investors, lenders usually demand bigger down payments because you haven't got a proven track record
Keywords: first-time investors, bigger, down payments
Keyword Location: paragraph 3. Lines 2-3
Explanation: As stated; lenders typically require larger down payments from first-time investors as they do not have an established history of investment.

By making a larger deposit, investors can limit their personal financial risk.

Answer: No
Supporting Sentence: He also highlights the fact that the mortgage payments and deposits are only part of the long-term cost of buying a rental property.
Keywords: mortgage payments, deposits
Keyword Location: Paragraph 4, lines 2-4
Explanation: It has been emphasized that the expenses associated with purchasing a rental property extend beyond just mortgage payments and deposits.

There are a lot of long-term costs to take into consideration before purchasing a rental property.

Answer: Yes
Supporting Sentence: He also highlights the fact that the mortgage payments and deposits are only part of the long-term cost of buying a rental property.
Keywords: mortgage payments, deposits
Keyword Location: Paragraph 4, lines 2-4
Explanation: It has been emphasized that the expenses associated with purchasing a rental property extend beyond just mortgage payments and deposits.

Banks require yon to hold a lot of money in reserve to meet your long-term property maintenance costs.

Answer: No
Supporting Sentence: There is also the cost of repairs, administration and maintenance, rental manager's fees, insurance and so on, all of which require you to hold a significant amount of money in reserve.
Keywords: repairs, administration, maintenance, rental manager's fees
Keyword Location: Paragraph 4, lines 3-5
Explanation: Owning rental property incurs costs such as repairs, admin, maintenance, manager's fees, insurance, etc. You need to have reserve funds to cover these expenses.

Many investors are tempted to pay more than they should for their investment properties.

Answer: Yes
Supporting Sentence: One of the biggest traps for first-time investors, according to Nylles, is the temptation to pay over the odds to get the property you desire.
Keywords: traps, first-time investors, temptation, pay
Keyword Location: Paragraph 5, lines 1-2
Explanation: According to Nylles, one of the biggest mistakes for first-time investors is succumbing to the temptation of paying more than the market value.

At the moment, house prices are extremely high in general.

Answer: No
Supporting Sentence: Urban renewal areas are often very attractive since house and rental prices in such places are low right now but can be expected to rise in the not too distant future.
Keywords: renewal, low, house, rental
Keyword Location: Paragraph 6, lines 2-4
Explanation: Urban renewal areas often appeal to buyers and renters due to their currently low housing prices, which are expected to increase in the near future.